Inflation spurs misbalance on labour market. Commentary by Info-Prim Neo

In two months, the National Bank of Moldova increased the base rate by 2.5 p.p., up to the level of 14.5% per year. It is the highest increase of this monetary index for the last few years, but also the most sudden. Since 2000-2001, there were not noted such rapid fluctuations of the base rate. This fact proves that the level of the inflation is quite alarming and can generate significant disturbances in the national economy. The fast increase in prices can generate new pressures, first of all, over the labour market. The industrial and agricultural regress, influenced by a fast inflation, could finally discourage the Moldovan employees. The two fields, with the highest number of workers, apparently will be unable to raise wages, and in some cases even to maintain the present level. Even if things go better in the wine-making industry, all problems are far from being solved, and the army of workers laid off for an undetermined period of time are gradually spending their reserves, therefore losing their hope of having the same earnings. The persons employed in industry, although continue to be paid, note that their month incomes have less and less purchasing power, meaning a poorer capacity to cover expenses, which continuously go up. In winter, the misbalance between the wage and the expenses could raise even more, as a result of the boost of electric and thermal power consumption, but also of the tariffs for some services. Along with this situation, the difference between the prices on the internal and neighbour markets is more evident. In Moldova, some prices are higher compared with the neighbour countries if we take into consideration the purchasing power of the population. In many cases, the prices are higher even if compared to the money value, and the consumer does not understand this huge difference in price. [Economy without arms and brains] All these circumstances determine the employees from Moldova to consider more seriously the possibility to join their relatives or friends working abroad on the legal or black labour market. A new wave of migration will cause considerable lacks on the labour market, which are already traceable. The economy of Moldova will gradually remain without labour force. At the same time, experts warn about the squalid situation of the human resources in Moldova, as a result of the massive migration. Therefore, the expenses of the state for the instruction of young specialists are in many cases compromised, because, when they return at home after several years, period in which they carried out low qualification works, the youths do not correspond anymore to the qualification level included in the graduation diplomat. Another common situation is when the well prepared specialists find a fairly paid workplace and do not return at home at all. Mixed, the degradation of the human capital and of the brain migration might cause considerable long-term difficulties on the labour market but also at the level of the whole economy. Moldova will lose one of its few advantages in front of foreign investors – the highly qualified and relatively cheap workforce. These misbalances prove that the economy of Moldova is poorly reformed, and the light increases of the last year introduced the wrong idea of the Government that everything is all right and that the economic reforms can be delayed. The recommendations of national and foreign experts were in many cases neglected or were considered political. Now, it is harder to make things right. It seems that the PM Tarlev, or most probably President Voronin will experience the situation Braghis did, when he was compared with a fireman back in 2000: “I will manage to put out one fire, but another one flashes out even stronger”. Are we coming back where we started from?!